Stock market today: The equity benchmark indices — Sensex and Nifty 50 — witnessed a heavy selloff in trade on Thursday, declining over 1% each.
Concerns over rising US debt and bond yields, escalating tensions in the Middle East and a subdued Q4 earnings season have kept investors on the sidelines.
“There is slight risk off in global markets. This is evident from the strength in alternate assets like gold and Bitcoin. The fundamental issue is the high fiscal deficit of the US which the market feels is unsustainable. The weak US 20-year bond auction and the spike in yields of 5-year, 10-year and 30-year bonds indicate the declining confidence in US bonds. In Japan, too, bond yields are rising.
Rising US bond yields are usually negative for emerging markets. But the situation is slightly different now,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
Explaining further, he added that the root cause of the problem is the unsustainable US fiscal deficit and debt. This may trigger some capital flows away from the US to other economies where prospects for growth and earnings are better, he added.
Market Outlook & Stock Ideas by Jay Thakkar
Jay Thakkar, Vice President & Head of Derivatives and Quant Research, ICICI Securities, shares his outlook for the Nifty50 and three stock ideas:
Nifty 50
Nifty is unable to surpass the 25,000 level after bouncing back from the 24,000 level. It has been facing strong resistance at the higher levels with some selling pressure from the FIIs as well, now after a long period of buying in the equity cash segment now they seem to have taken a pause. On the upside, the 25000 strike has the highest call OI, whereas the 24000 strike has the highest put OI, so the range for the Index is 24000 to 25000 levels. There is a small gap around 24200, which is likely to be filled in this correction or consolidation. Now, on the upside, 24,800 is an immediate resistance, which, if taken off, will be the first signal of reversal of trend from down to up; otherwise, the short-term trend is in favour of the bears from the profit-booking point of view.
The positional bias on the Index is still positive, and it is quite likely to head towards 25800 levels. The India VIX has been rising this week, as well as, the global markets are showing signs of weakness, hence overall the short-term trend remains sideways to negative.
Stocks To Buy in the near-term – Jay Thakkar
Jay Thakkar of ICICI Securities suggests buying Divi’s Labs, Hindustan Aeronautics and Tata Technologies in the futures market.
Buy Divis Labs futures in the range of 6530 to 6560, stop loss of 6350, target at 6850 to 7000 levels
Divis Labs has broken out of multiple swing resistance, and with that, the stock has also started to witness long positions in futures. The correction had witnessed profit booking, i.e. long unwinding and now, after the positions have become light in F&O, it seems to be reversing back on the long side. The options activity also suggests that the bulls have an upper hand as there have been put additions at the lower levels along with call unwinding, so it is a double benefit for the bulls. The stock is trading above its 20-day VWAP as well as its max pain levels, hence the short-term outlook is positive.
Buy HAL futures in the range of 5000 to 5050, stop loss of 4900, target at 5250 and 5350
The Nifty defence sector index has been forming higher tops and higher bottoms, and the overall trend is bullish in it. HAL has also been trending higher and has just started adding long positions after witnessing huge profit booking and long unwinding. So, now with this fresh breakout as well as long additions, the overall trend appears bullish. The options activity suggests call writing at the higher levels, which can prove to be resistance at the higher levels, however, the put writers have become aggressive at the ATM strike and the stock is also trading above its 20-day VWAP and its max pain level, so the overall trend is positive.
Buy Tata Tech futures in the range of 760-770, stop loss of 730, target at 810 and 830
The stock has provided a breakout from an inverse head and shoulders pattern, which is a bullish reversal sign in the near term. It had witnessed huge short build-up since it got introduced in the F&O segment; however, since the breakout, there is short covering witnessed which is a positive sign in the near term. There have been put additions at almost all the strikes from ITM to OTM, with some call unwinding also witnessed at higher levels, hence the upside probability is higher on account of short covering. The stock is trading well above its max pain and modified max pain levels of 700 and 749, as well as its 20-day VWAP levels of 680, hence, the overall trend in the short term appears bullish.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
